Monday, 2023 September 25

Pinduoduo partners with Gome, former largest electronics retailer in China

Shanghai-based e-commerce company Pinduoduo (NASDAQ: PDD) announced Sunday a strategic partnership with Gome Electrical Appliances (HKSE: 0493), once the largest electronics retailer in China, in a move to make both companies more competitive in the online consumer electronics market, according to a company’s official press release.

As part of the partnership, Pinduoduo will also subscribe to USD 200 million in convertible bonds to be issued by Gome. Pinduoduo’s bonds are convertible at HKD 1.215 per share, a 66.4% premium against Gome’s closing price of HKD 0.73. If fully converted, Pinduoduo will get a 5.6% stake in Gome’s enlarged share base.

Pinduoduo will bring the electronics retailer’s entire product range to its platform, which includes domestic and international brands like Haier, Midea, Toshiba, and Siemens. The platform will also integrate Gome’s logistics, delivery, and assembly services in its offerings, and will work with Gome to upgrade its supply chain to better meet customer needs and preferences.

Gome was once the largest retailer in China, competing with Suning, but fell behind in the internet and mobile era, partly due to a corporate governance scandal which led to its founder, Huang Guangyu, being sentenced to 14 years in prison in 2010 for stock manipulation.

Teaming up with Gome could be an effective way for Pinduoduo to fend off competition, including and, according to a report posted by Celilia Liu, an analyst at 36Kr Research, a market research unit of local media outlet 36Kr. The partnership will also allow Pinduoduo to develop their own logistics ecosystem.

36Kr is KrASIA’s parent company

Jingli Song
Jingli Song
I believe Chinese innovation at various level needs to be known by the world.

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